The statutory scheme that keeps them running is set to expire in 2020 – and there’s no back up plan in place yet

It’s past time for Michigan to pass some legislation to address the problem of funding its county courts. If lawmakers do nothing, counties will have to scramble to come up with hundreds of thousands of dollars to keep their local courthouses open.

Michigan’s county courts recoup their operating expenses by passing their expenses on to convicted criminal defendants in a user fee model. This model is problematic because it’s a poor business practice (courts recoup only a fraction of what they charge) that is also probably unconstitutional. Moreover, it’s about to get thrown out, because the statute that authorizes courts to fund themselves this way will expire in 2020. Without something else to replace it, counties will have to find a way to meet the considerable expense of operating the courts – or risk being subjected to lawsuits.

Depending on User Fees: A Failed Business Model

Summary of Circuit Court Cost Data, 2015

Costs Imposed by Average County

$311,612.82

Costs Imposed in Average Case

$464.61

Costs Collected by Average County

$76,414.33

Average Amount Collected

$150.08

Average Number of Cases with Costs

575

Average Percent of Costs Collected

24%

Summary of Circuit Court Cost Data, 2016

Costs Imposed by Average County

$334,645.10

Costs Imposed in Average Case

$432.18

Costs Collected by Average County

$112,124.90

Average Amount Collected

$206.24

Average Number of Cases with Costs

586

Average Percent of Costs Collected

51%

The Legislature created the Trial Court Funding Commission to study alternatives to the current funding scheme, but the progress to date on this problem has not been encouraging. Namely, the statute authorizing the funding model was slated to expire in 2017 and, rather than replace our current broken court funding scheme with something more sustainable, lawmakers simply gave the law a three-year extension. More than two years in, we’re no closer to solving the problem.

This is a big deal because the Michigan Supreme Court has already said that trial courts do not have the authority to fund themselves through imposing fees on defendants. In response, lawmakers hurriedly passed a temporary measure to nullify the high court’s ruling and keep county courts running, but the funding structure has been called into question before the high court once again, and Michigan is not prepared to respond to another unfavorable ruling.

While the state pays judges’ salaries, the day-to-day court operations are funded by county governments, which are – for now – allowed to prorate these costs and pass them on to people convicted of felonies. If criminal defendants are tried but found innocent, courts recoup nothing – creating a perverse incentive for judges to convict and an uncertain revenue stream for counties.

Because criminal defendants are frequently indigent, courts actually bring in only a fraction of what they are authorized to charge offenders.

There’s a few ways this could end. The clock might run out on the statute authorizing the current funding mechanism, and we will either replace it with a more sustainable and equitable system, or it will get strung out for another three or more years. Or – and this is where things could get messy – the state Supreme Court might rule the whole scheme unconstitutional, in which case the counties who are caught unawares by the decision will be left scrambling and likely vulnerable to additional litigation.

The clear solution is to end courts’ reliance on guilty verdicts to keep their doors open. County and state officials must work together to channel a reliable stream of tax revenue to the courts, which, after all, are a core function of government and benefit all of us. There simply is no time to lose. Whether by sunset or Supreme Court opinion, the current stream of court funding will soon be cut off, and we have no option but to be ready.

As expected, both candidates have different plans for economic growth

This week’s big political race in Michigan played out as expected. Marquee candidates Gretchen Whitmer, a Democrat, and Michigan Attorney General Bill Schuette, a Republican, each won their respective party’s nomination to be governor. Many of the policy choices advanced by each — it will not surprise the reader — are not championed by the other.

But they have agreed on something: Both candidates have supported state corporate handout programs. During her tenure in the state Legislature, Whitmer voted to approve $4.5 billion worth of discriminatory incentives for businesses. She voted in favor of 98 percent of the subsidies that came before her. Schuette, also a veteran state lawmaker, voted to approve just $224 million, but this represented 100 percent of the subsidy dollars that came before him.

Past, however, is not necessarily prologue. Both these candidates discussed targeted incentive programs on the campaign trail.

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At a Michigan Economic Developers Association meeting in March, Whitmer promised to “Unleash the MEDC” in her first year as governor. Presumably, this means she believes that the Michigan Economic Development Corporation maintains a certain prowess for creating more jobs through state programs than might be destroyed by the taxes required to finance them. The MEDC is effectively the state’s corporate welfare department, and it redistributes money taken from taxpayers across Michigan to a select few corporations and industries.

Schuette, for his part, has focused his policy reform ideas around a broad-based tax cut, and he did so publicly even before formally declaring himself a candidate for the governor’s office. He has repeatedly advocated rolling back the state’s personal income tax to 3.9 percent. That was the rate promised to Michigan taxpayers in 2007 in exchange for an 11.5 percent income tax increase, one that was supposed to be temporary. But as for the MEDC, it is unlikely to disappear under a Schuette administration.

In an interview with the Mackinac Center’s Michigan Capitol Confidential, Schuette told reporter Evan Carter, “Objective one is have an environment of low taxes, fewer regulations, and so we can win again.” But he added, “We also need to compete against other states that offer incentives for businesses to plant capital and build jobs.” Schuette maintains that he doesn’t believe in unilateral disarmament, a common argument made by those who support taxpayer-funded corporate subsidies.

Both candidates would be wise to avoid the use of selective corporate handouts or other targeted favors to business as a way to create jobs. The evidence against them (scholarly and anecdotal) is overwhelming. The subsidy programs are almost always ineffective. Indeed, these programs do so little to spur real economic development that it is fair to say that states aren’t necessarily fighting over jobs so much as job announcements.

These programs amount to little more than expensive braggadocio and ribbon-cutting ceremonies for each state’s political class. They are fundamentally unfair too. Unfair to taxpayers who have their wealth confiscated and transferred by force to corporations, and unfair to in-state businesses who may have to compete against a subsidized rival.

The good news, at least, is that candidate Schuette has not made these programs the centerpiece of his economic strategy. Quite the contrary. As far as this author knows, the only reason Schuette even discussed the topic on the campaign trail was that a Mackinac Center employee asked him about it.

His policy platform — which is long on broad tax reforms — is much more likely to facilitate economic growth and development than any use of targeted, state-bestowed subsidies for business anywhere.

Last spring, the Mackinac Center estimated the impact of an income tax cut. We found that if the state rolled back the personal income tax rate from 4.25 percent to 3.9 percent, Michigan could add 15,000 jobs to its economy in the first year afterward.

That would create far more jobs than the state’s corporate welfare apparatus and be fairer too.

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Interesting or noteworthy bill introductions

The Legislature remains on a summer and primary season break, with a tentative session scheduled for Aug. 15, and regular sessions resuming Sept. 5. Rather than votes, this report contains some interesting or noteworthy recent bill introductions.

Senate Bill 1061: Require state to allow some cremated remains depositions in state parks

Introduced by Sen. Tonya Schuitmaker (R), to require the Department of Natural Resources to cooperate with certain associations in allowing the cremated remains of deceased individuals to be buried in a designated part of a state park. Referred to committee, no further action at this time.

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Senate Bill 1063: Authorize local mail-in elections

Introduced by Sen. Steve Bieda (D), to allow local governments to hold elections for local officials or local ballot measures by mail. This would not apply if any state offices or statewide measures are on the ballot. Local clerks would send a ballot to every registered voter, who could return it by mail, or at designated drop-off points on election day. The bill would establish comprehensive rules for the process and authorize the Secretary of State to administer them. Referred to committee, no further action at this time.

House Bill 6043: Require report to state of disclosures on prospective school employees

Introduced by Rep. Cara Clemente (D), to expand a law that requires individuals who apply for a school job to sign a document that authorizes the applicant’s current or former employers to disclose any unprofessional conduct to the school. The bill would require the school to report to the Department of Education any information obtained this way about sex or other crimes involving a minor, or inappropriate conduct involving a minor. The bill would also require this if a school receives similar information about a current employee from a credible source. The department would be required to keep these reports for six years. Referred to committee, no further action at this time.

House Bill 6049: Increase tax assessor training requirements

Introduced by Rep. James Lower (R), to revise many details of the functions, qualifications, restrictions and requirements on property tax assessors and local tax assessor offices, the effect of which is generally to further professionalize these functions. Referred to committee, no further action at this time.

House Bill 6052: Get independent review of business subsidy efficacy

Introduced by Rep. Thomas Albert (R), to require the state to contract with a consultant, nonprofit entity or academic institution to evaluate whether government economic development incentives are effective at growing the state economy and employment. This would apply to programs that grant tax breaks or actual cash subsidies to certain companies selected by state officials and political appointees. Referred to committee, no further action at this time.

Introduced by Rep. Scott VanSingel (R), to establish a process where an individual seeking one of the many occupational licenses that are mandated by the state as a condition of earning a living in a particular profession could get a preliminary determination of whether any court judgments against him or her would likely result being denied a license under provisions in these laws that require “good moral character” in an applicant. Referred to committee, no further action at this time.

House Bill 6064: Create new corporate subsidy program

Introduced by Rep. Jason Wentworth (R), to authorize up to $50 million in annual state subsidies to some private businesses selected by state officials through a device the bill would create called a “rural development fund.” Reported from committee, pending before the full House.

House Bill 6069: Ban smoking in parks and playgrounds

Introduced by Rep. Peter Lucido (R), to ban smoking or vaping tobacco in state parks, municipal beaches and public playgrounds. Referred to committee, no further action at this time.

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Not all energy is there when you need it

When you flip a light switch on, you expect an instant result. If everybody flipped a light switch on simultaneously, they would all expect instant results. A key factor that helps to determine whether people get the light they expect is if the electric generation sources that create the power for those many switches are “dispatchable” or not.

Dispatchable sources of electricity are those that can supply the power we need, when we need it. “When” and “how much” are the key concepts, because our power usage is constantly and rapidly fluctuating, and providers need to respond quickly to meet the demand. Dispatchable also refers to the amount of power being supplied, since overproducing in times of low usage is just as inefficient as underproducing in times of need.

Non-dispatchable sources are those that the companies providing electricity cannot control. Renewable energy sources, like solar power and wind power, are not consistent, nor are they controllable. The solar radiation that hits solar cells and produces electricity is affected by nightfall, cloud cover, and the geographical location of the cells. Likewise, the wind does not blow all the time. Wind currents are affected by air density and temperature, which vary throughout the day. And the wind must be neither too strong nor too weak for it to generate electricity.

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Hydroelectric power is the most dispatchable source of energy. Flowing water can be made to power a turbine in a matter of seconds and is the most efficient way to produce electricity. Since the water captured behind a dam needs nothing more than gravity to ensure it will spin a turbine, it is available to produce electricity at a moment’s notice.

Nuclear and coal plants are dispatchable in that they are completely controllable. Once running, they affect the grid supply instantly and can be relied on to continue running consistently. These plants are typically used to provide baseload power — the always-on, minimum amount of electricity needed to meet the never-ending demand for electricity in a modern society. They supply the energy that runs our society, regardless of the weather or time of day.

But baseload generators may not always provide enough energy. A hotter-than-usual summer night would, for example, increase the demand for air conditioning. That increased demand would require more energy than normal, and quickly. This is where dispatchable energy comes in. Since nuclear and coal power plants are already meeting the minimum demands, other sources, such as natural gas, must step in quickly. When the amount of electricity a region requires returns to normal, a dispatchable source can be slowed or powered down, preventing overproduction.

Non-dispatchable sources, like wind and solar, do provide some energy. They can charge batteries when the sun is shining or the wind is blowing, and then use this power during times of peak energy usage. For example, the Crescent Dunes power plant in Nevada can hold 10 hours of energy when fully loaded. But solar energy is not equally useful in all areas, especially in a state like Michigan, which has less than half the total number of clear days that states like California, Nevada, Arizona and New Mexico receive.

Renewable energy sources augment the baseload power supplies of nuclear and coal, but since we can’t control the weather, they are not reliable sources of energy. To ensure that the lights come on with the switch is flipped, it’s best to have power sources that do not depend on the weather.

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New rules attack cyber school option for families

Bureaucrats can rely on new laws to crush innovative learning options. But they can rely on new interpretations of existing rules to do the same thing, bypassing laws that elected officials have approved. Such is the case with a new set of rules the Michigan Department of Education has released for financial auditing.

If these rules stand, they will threaten the existence of unconventional education opportunities that have proved to be a lifesaver for some families with challenging health needs, as well as for youths who struggled in the standard, one-size-fits-all system. Just one example is Success Virtual Learning Centers, a charter school that combines online and face-to-face learning to serve at-risk kids.

The department's Pupil Accounting Manual guides school auditors on how to properly count students, which goes a long way in determining the amount of funding districts and charter schools receive through the state’s foundation allowance. Two new rules in that manual spell danger for innovative schools.

Buried in the cyber school section of the manual, which affects schools like Success VLC and more than a dozen other online charter schools, is a creative reinterpretation of established law about the number of instructional hours a school must provide. The new interpretation would make operating an online charter school virtually impossible. It also clashes with language in the recent school aid budget approved by the Legislature, which says student "participation" is to be defined the same for district online programs as for cyber schools.

State law requires public schools of all types to provide a student at least 1,098 hours of scheduled instruction each year in order to get the designated foundation allowance funding on behalf of that student. The foundation allowance, the bulk of state money a school receives, is determined by the number of students physically present or active at a school on two “count days,” one in October and another in February.

The first rule says cyber schools "cannot enroll a pupil if, at the time of enrollment, less than 1,098 hours remain in the cyber school's schedule." In other words, cyber schools can only receive funding on behalf of students who enrolled very shortly after the school year begins.

But schools like Success VLC often take in new students who transfer midyear from a different school. It's bad enough that the law puts so much weight on a fall count day (it determines 90 percent of a school’s student tally), which means that most of the funding doesn’t follow these midyear transfers. But worse, under this new interpretation of the law, a student could enroll in a cyber school in time to be included on count day but still not generate any new funding for it.

The second rule is even more unreasonable. For the first time, the department says that cyber schools must log a full 1,098 hours of a student's activity online, tracked by the school's software. Time spent doing assignments away from the computer, apparently, would not count as instructional hours. But students in many cyber school programs do not complete all their learning while logged on, just like students in conventional schools do not receive instruction every minute class is in session.

Still, this rule goes beyond imposing a Procrustean standard to make cyber schools operate like brick-and-mortar schools. It also comes with harsher consequences for cyber schools.

If excessive snow days or other conditions reduce a school’s instructional hours below the legal standard, a conventional district could be docked a prorated amount of its state funding. One hour short, for example, would mean it loses roughly one one-thousandth of foundation allowance funding. Under this rule, though, cyber schools would lose all funding for all students who spent less than 1,098 hours in the online system.

To get that money back would require many months of appeals within the department. Even if some appeals ultimately succeed, the bureaucratic friction will deter unconventional programs that provide opportunities for kids who aren't served well in the current system.

Dallas Bell, superintendent of Success VLC, says he has met with many department staff members who support helping the at-risk students and families who benefit from a cyber school option. Unfortunately, though, they have been stymied by more senior-ranking bureaucrats who seem bent on trying to squeeze education back into a small, tight box.

Lawmakers should ask the department’s senior staff why they have come up with these new rules and what evidence shows that these changes are necessary and good for students. Otherwise, it would appear that the department is unfairly singling out cyber schools and burdening them with rules that threaten their very method of operation.

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In some places, cities pay two or three times the base salary for one person

In cities around Michigan – including those in severe financial trouble – taxpayers are paying large amounts of money in overtime and extra pay. In some cases, cities pay two or three times a typical salary for just one person to do a job.

Some recent stories from Michigan Capitol Confidential highlight the problem:

Several other employees in Flint had similar situations in 2017. One operator foreman earned $117,000, more than half from overtime. The other operators in the water department made $107,000, $96,000 and $82,000 . Their base salaries were between $56,000 and $60,000 that year.

A maintenance worker for the Detroit People Mover elevated train collected nearly $175,000 – more than his general manager – in 2017. His base salary was $57,000. There were 11 employees paid six figures by the entity and nearly all of them had base salaries between $45,000 and $60,000, with the rest of their pay coming from overtime.

In Ann Arbor, police officers earn one-third or more of their total pay as overtime. One detective spiked his pension payment by boosting his final year’s compensation by nearly $50,000. Other employees used payments for unused compensation, vacation and sick time to do the same.

In Grand Rapids, 26 city employees made more than $20,000 in overtime last year. Through overtime, 378 employees were able to push their pay to more than $80,000.

So why are public entities paying so much money to one person when they could hire an extra person instead? After all, they would save money on the overall pay and likely provide better service with two people instead of just one.

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A key culprit is legacy costs, specifically, pensions and health care. An extra employee means more debt in these systems for cities that have been doing a poor job projecting the actual costs. (See Mackinac Center research on pension and retiree health care debt in Michigan’s largest cities.) One employee means just one pension – even if it is more generous.

This isn’t just a problem for Michigan cities. The state government has been shrinking, at least when it comes to the number of employees. Yet it is paying much more for them. Overall, since 2000, the state has 14,700 fewer employees but is spending $286 million more for them, adjusting for inflation. That’s a 38 percent spending increase on 24 percent fewer workers – not a good deal for the state, citizens or even the unions representing them.

The good news is that the state has begun getting a handle on its long-term debt. State employees, beginning in 1997, receive 401(k)-type plans, and most new school employees will do the same starting this year. Those two changes will help contain costs, provide stability for the future and mean a better bang for the buck for state residents. Municipalities need to look to do the same.

With fewer than 20 days left in the legislative session, that’s plenty of time to pass good reform

August marks the beginning of the back-to-school bustle and the return of lawmakers from their summer recess. Although only a few session days remain, three important proposals for criminal justice would, if passed, create significant and long-lasting improvements for many Michiganders.

Civil asset forfeiture reform: Civil forfeiture is a policy that allows law enforcement agents to seize and forfeit, or take ownership of, private property. In Michigan, police officers need not wait for a person to be convicted or even charged with a crime before they forfeit a piece of property and spend the proceeds. Reports reveal that in 2017, nearly 1,000 legally innocent people had their property forfeited by the government. Legislation that has passed the House and is under consideration in the Senate would allow police to continue to seize property, but not forfeit it unless its owner is convicted of a crime. This important protection, now law in 14 states, would shore up private property and due process rights without limiting the ability of law enforcement officials to investigate crimes and detain property they suspect was involved in a crime.

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Raise the age: Michigan is one of only five states in which 17-year-olds are automatically prosecuted as and imprisoned with adults. Research consistently shows that adjudicating them in the juvenile system produces better outcomes; for one thing, it shows they are 37 percent less likely to commit crimes in the future than youths funneled through the adult system. Legislation pending in the House would raise the age of adult criminal liability in Michigan from 17 to 18. Shifting 17-year-olds into the juvenile system requires extra resources for that system so that it can cope with a larger number of people, but other states that have raised the age have found that the benefits far outweighed the costs over the long term.

Lift the occupational licensing ban: There are about 200 professions and skilled trades in Michigan that require workers in those jobs to first get a license from the state government. Practically every occupational license contains a provision that effectively bans people with a criminal history from being eligible for a license. House proposals would end the automatic assumption that people with a criminal history — of which there are millions in Michigan — lack good moral character and can never be eligible for a license. Each year, 50,000 Michiganders are convicted of a felony. This means that our workforce stands to make considerable gains by lifting the blanket ban while still allowing a person’s criminal background to a factor when the state decides whether to grant a license. Clearly, we don’t want people convicted of fraud working in fiduciary or legal capacities. But in most cases, former offenders can work safely and effectively in high-demand jobs, which reduces their likelihood of recidivism and bolsters our workforce at the same time.

Lawmakers will face many proposals competing for their time and attention. But because criminal justice issues disproportionately affect the poor and vulnerable of our state, and criminal justice itself is so integral to an effective government and healthy society, lawmakers should pay special attention to these issues.

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Interesting or noteworthy bill introductions

The Legislature remains on a summer campaign break with no sessions scheduled until after the Aug. 7 primary election. Rather than votes this report contains some interesting or noteworthy recent bill introductions.

Senate Bill 1051: Require governor create annual state “strategic plan”Introduced by Sen. Dave Hildenbrand (R), to require the governor to submit an annual “strategic plan” for the state alongside the annual executive budget recommendation. This would have to include, “the mission, vision, goals, strategies, and performance measures for each state department, including measures of the department's inputs, outputs, and output measures.” Referred to committee, no further action at this time.

Senate Bill 1056: Accommodate “genetic material for use in posthumous conception” in willsIntroduced by Sen. Judy Emmons (R), to revise the law governing wills and estates to accommodate and create rules for when a decedent leaves behind “genetic material for use in posthumous conception,” or when there is “an individual in gestation at a decedent's death” who may have a claim on the estate. Referred to committee, no further action at this time.

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House Bill 6012: Authorize multi-state traffic ticket reciprocityIntroduced by Rep. Steven Johnson (R), to require the Secretary of State to suspend the license of a Michigan driver if notified by another state that the individual got a ticket and failed to pay it, or didn’t show up in court. Also, to notify other states if one of their residents does the same here. Referred to committee, no further action at this time.

House Bill 6020: Repeal crime of having sex without disclosing HIVIntroduced by Rep. Jon Hoadley (D), to repeal a law that makes it a crime for a person who knows that he or she has an HIV infection to have sex with another person without disclosing this. Under the bill this would be a crime only if done with the intention of infecting the other person. Referred to committee, no further action at this time.

House Bill 6026: Establish forensic laboratories oversight regimeIntroduced by Rep. Tom Barrett (R), to mandate that forensic laboratories obtain a professional accreditation, and create a state forensic science commission to regulate forensic laboratories, investigate claims of negligence and nonperformance, and make recommendations to the legislature. Referred to committee, no further action at this time.

House Bill 6030: Restrict declawing catsIntroduced by Rep. Yousef Rabhi (D), to mandate that veterinarians performing onychectomy and flexor tendonectomy procedures on cats and other animals provide the owner with informational materials that the Department of Health and Human Services would be required to make available. Referred to committee, no further action at this time.

House Bill 6031: Ban debarking dogsIntroduced by Rep. Tim Sneller (D), to prohibit performing a “devocalization” procedure on an animal, such as debarking a dog, except for therapeutic reasons related to the dog’s health (versus an owners convenience), with penalties of up to 93 days in jail for a single offense. Referred to committee, no further action at this time.

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More courts use actuarial tools to assess risks offenders pose to society

Law school professors teach that the legal system relies on judicial neutrality and binding precedent to ensure that cases get resolved objectively and consistently. But, they regularly caution, the reality is that sometimes an outcome can be influenced by what the judge ate for breakfast that morning.

In today’s increasingly data-driven world, that possibility is unacceptable, given that data can provide clarity and accountability. Many criminal courts, thankfully, are innovating in an effort to remove the last vestiges of partiality from the courtroom.

Although Michigan has adopted a set of sentencing guidelines that account for an offender’s criminal history and the severity of the crime, these two factors are not enough to guide decisions about whether to release an accused criminal who is awaiting trial. This important decision has serious implications for the defendant’s ability to retain employment, housing and child custody, and atleastfivestudiesshow that pretrial detention has an adverse impact on the outcome of the defendant’s case.

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The Michigan Court Rules is a set of guidelines for judges that names a number of factors judges should consider when deciding whether to release a defendant before the trial starts. These include the person’s mental condition, financial status, employment status, character and reputation, and ties to the community. But the guidelines do not indicate what weight a judge should give to each or all of these factors. Some research suggests that they may not include all the factors that most reliably predict an individual’s risk of flight or new criminal behavior.

Thus, some criminal courts have begun to use risk assessment tools, from actuarial science, which ask for information most likely to predict an individual’s risk to society. The courts use their inputs to generate a score for each individual, indicating whether it is safe to release him or her.

These tools may sound like a magic formula, but media outlets, academics and others have criticized them sharply. One prominent risk assessment tool called COMPAS, developed by the Northpointe, Inc. and used by the Michigan Department of Corrections, was analyzed by ProPublica in 2016 in an article that quickly received much attention. The news outlet claimed that the tool contained racial biases and produced inaccurate predictions. Follow-up research by other organizations revealed that the problem may be even worse than ProPublica alleged. The journal Science Advances examined risk assessment tools and found them to be no more accurate at predicting recidivism than untrained humans.

The goal of risk assessments — to accurately predict a given individual’s risk to society — is a laudable one. But the concerns about their accuracy and bias should temper courts’ reliance on their results. The irony is that these tools attempt to generate an individualized result by relying on statistical generalizations, and they attempt to provide predictability and accountability by relying on proprietary algorithms that are far from transparent.

The middle road in this case is the best path forward. Judges should consider new data and research. But some subjective human judgement is needed as well. These high-stakes decisions should never be left entirely to a statistical algorithm.

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Progress is being made, but another $7.5 billion is still needed

When the state of Michigan closed its defined-benefit pension plan to new employees in 1997, it still needed to pay for the benefits that existing employees had earned. Unfortunately, the state went from having saved enough money to pay all promised benefits to a $6 billion underfunding gap. New data from the state shows that it is finally starting to catch up.

From 1997 to 2002, lawmakers had enough money saved to pay for the pension benefits promised to state employees. But between 2002 and 2012 the state failed to keep up with the growing costs of those benefits and it generated $6.2 billion in debt to the people in the retirement system. That debt stayed about the same for the next several years.

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When lawmakers promise employees a pension, they have to guess at what these pensions will cost in the future. That estimate depends on a lot of factors, like how long employees are going to collect their pensions and how much interest the money set aside will earn. State managers annually reassess this information.

According to the latest assessment, unfunded liabilities fell by $100 million in 2017. This is because the state outperformed its assumptions, but also because the state changed its assumptions. The change is going to make it easier to meet assumptions in the future, too, making it less likely the state will add more debt to this pension system.

The state pays its current retirees extra insurance on top of Medicare, or prior to an employee’s Medicare eligibility, if they retire early. These benefits are different from pensions because they lack the constitutional protections, meaning the state could reduce or even eliminate them. The state stopped offering blanket pledges to pay these benefits to new employees and instead offers contributions to a savings plan to help pay for future retirees’ insurance costs.

Nevertheless, the state decided to set money aside to pay for current retiree health benefits costs. Lawmakers have saved $2 billion to pay for these benefits and would need another $7.5 billion to catch up on the rest, if lawmakers choose to prefund the costs instead of reducing the benefits.

These are positive changes. It’s been too easy for politicians to promise retirement benefits now and push the costs onto future taxpayers. That is why state and local governments’ largest creditors are not banks or bondholders or anyone else that loaned these governments money, but rather their own employees and retirees. That’s unfair to taxpayers and government workers alike. But the latest reports show that reforms to these systems are slowly helping the state rectify the problem.